Leonard Wood: CCH books 'so messed up'

Jason Ferguson

Published: Thursday, May 2nd, 2013

By Jason Ferguson

New Custer County Housing and Redevelopment Commission (CCH) chairman Leonard Wood didn’t mince words about the financial situation—and bookkeeping in general—of CCHâï¿½ï¿½when he addressed the Custer County Commission at the commission’s April 24 meeting.

“So messed up,”âï¿½ï¿½was how Wood described the situation, saying he and fellow new board members Dennis Moulton (vice chairman) and Tim Holland (secretary/treasurer) were just diving into the financial situation, but had seen enough to know it’s not good.

“We don’t know what we got, but it looks like there is a terrible cash-flow problem,”âï¿½ï¿½Wood said.

Wood said the CCHâï¿½ï¿½board is in the process of getting an audit of the books, something that hasn’t been done since 2009. Worse yet, Wood said it appears the books for CCH have not balanced since 2005.

Both Ketel Thorstenson and DeSmet & Biggs have shown a willingness to submit bids to do the audits, Wood said, adding it may be necessary for CCH to get a bridge loan from the commission until everything is figured out.

Wood said Joe Lux of Hot Springs is CCH’s current attorney, but the board is unsure if he will be retained. County attorney Tracy Kelley offered to check with the Pennington County Housing Authority to get the names of some other attorneys who have a background in this sort of law.

CCH is also still embroiled in a lawsuit with Rapid Construction over the Hermosa sewer line expansion.

The lawsuit, filed in Rapid City, claims that CCH and other defendants owe Rapid Construction $241,543 for pipe the company purchased for the project.

The lawsuit claims that on Nov. 17, 2005, CCHâï¿½ï¿½director Connie Gorsuch named Rapid Construction as low bidder for the project, which was aimed at expanding sewer service under Hwy. 79 in Hermosa to the west. Once that infrastructure was in place, CCHâï¿½ï¿½wanted to pursue developing senior housing in Hermosa with the help of South Dakota Housing or through the U.S. Department of Agriculture’s Rural Development Program. However, those entities required the needed infrastructure before they would get involved.

Beginning in November 2005, Rapid Construction, at the behest of Gorsuch, ordered the PVC pipe and other materials necessary for the project. Eventually, the Town of Hermosa backed out of the project due to concerns over the town’s potential debt limits and financing problems.

The lawsuit states that since that time, Gorsuch has “continually represented to Rapid Construction and assured that they had an agreement with the Town of Hermosa that the pipe and materials would be utilized on the deferred project when financed, and Rapid Construction, as agreed to, would be paid in full for the pipe and materials, together with interest at the rate of two percent per month.”

No settlement has been reached on the lawsuit.

CCH was also recently faced with being asked to leave Custer City Hall, where it is housed, but the city has indicated a willingness to allow CCHâï¿½ï¿½more time to find a new facility.

Commissioner David Hazeltine said he is willing to assist the CCHâï¿½ï¿½board with funds if the county has them, saying he has wanted to get CCHâï¿½ï¿½straightened out “since he came on (the commission) four years ago.”

Wood said he and the other new CCH board members were enthusiastic and would work with the other board members to get to the bottom of the problems plaguing CCH. Commissioner Phil Lampert asked Wood to “keep an open mind”âï¿½ï¿½and not have any preconceived agendas when investigating the problems.

“Iâï¿½ï¿½don’t want this to turn into a witch hunt,”âï¿½ï¿½he said.

That led Wood to call the situation messed up, and said he had already heard Lampert’s concerns over the investigation from another CCH board member.

“Everybody has an open mind,”âï¿½ï¿½Wood said.âï¿½ï¿½“Iâï¿½ï¿½don’t need to be told three or four times.”

The commission also heard from county resident Blair Waite, who asked the county to reduce or eliminate a $450 application normally required by the county for a lot line adjustment on his land.

Blair said he bought the land in question in the ’70s and had previously split one acre out of the parcel to put a home. Subsequent to that, Waite purchased additional acreage next to his land, but never requested to have the lot line erased. However, Waite did pay the $450 when he peeled off the one acre from the lot, which is why he requested the reduction or elimination of the fee this time around.

County planning director David Green said he felt the most appropriate solution would be to eliminate the $350 preliminary plat fee and charge Waite only the $100 final fee to pay for planning’s time reviewing the plat and the planning commission’s work. The commission eventually voted to follow Green’s recommendation.

Finally, the commission reconvened as the board of adjustments and unanimously approved giving commissioner Mark Hartman a variance for a garage on his land southwest of Custer. Hartman abstained from both the discussion and vote on the issue.

Hartman’s garage, according to county ordinance, is built too close to his property line, something that wasn’t discovered until the new adjacent property owner brought the issue to the attention of the commission. The options for the commission were to grant Hartman a variance, move the property line or require the garage to be moved. However, there are rock outcroppings creating an impediment to moving the building.

Lampert said the county planning commission recommended approving the variance, but cautioned the commission that Hartman’s case was “probably not the only case in Custer County where this is happening,”âï¿½ï¿½and said other such variance requests are likely to come before the commission.

Hazeltine said he initially wasn’t in favor of granting the variance, but said after studying the issue he was, although he conceded things could have been done differently, such as seeking a variance prior to the construction.

“He should not be penalized because he is a commissioner,”âï¿½ï¿½Hazeltine said. “If Mark wasn’t a commissioner, Iâï¿½ï¿½would still approve this. Iâï¿½ï¿½couldn’t have said that last week.”

New Custer County Housing and Redevelopment Commission (CCH) chairman Leonard Wood didn’t mince words about the financial situation—and bookkeeping in general—of CCHâï¿½ï¿½when he addressed the Custer County Commission at the commission’s April 24 meeting.

“So messed up,”âï¿½ï¿½was how Wood described the situation, saying he and fellow new board members Dennis Moulton (vice chairman) and Tim Holland (secretary/treasurer) were just diving into the financial situation, but had seen enough to know it’s not good.

“We don’t know what we got, but it looks like there is a terrible cash-flow problem,”âï¿½ï¿½Wood said.

Wood said the CCHâï¿½ï¿½board is in the process of getting an audit of the books, something that hasn’t been done since 2009. Worse yet, Wood said it appears the books for CCH have not balanced since 2005.

Both Ketel Thorstenson and DeSmet & Biggs have shown a willingness to submit bids to do the audits, Wood said, adding it may be necessary for CCH to get a bridge loan from the commission until everything is figured out.

Wood said Joe Lux of Hot Springs is CCH’s current attorney, but the board is unsure if he will be retained. County attorney Tracy Kelley offered to check with the Pennington County Housing Authority to get the names of some other attorneys who have a background in this sort of law.

CCH is also still embroiled in a lawsuit with Rapid Construction over the Hermosa sewer line expansion.

The lawsuit, filed in Rapid City, claims that CCH and other defendants owe Rapid Construction $241,543 for pipe the company purchased for the project.

The lawsuit claims that on Nov. 17, 2005, CCHâï¿½ï¿½director Connie Gorsuch named Rapid Construction as low bidder for the project, which was aimed at expanding sewer service under Hwy. 79 in Hermosa to the west. Once that infrastructure was in place, CCHâï¿½ï¿½wanted to pursue developing senior housing in Hermosa with the help of South Dakota Housing or through the U.S. Department of Agriculture’s Rural Development Program. However, those entities required the needed infrastructure before they would get involved.

Beginning in November 2005, Rapid Construction, at the behest of Gorsuch, ordered the PVC pipe and other materials necessary for the project. Eventually, the Town of Hermosa backed out of the project due to concerns over the town’s potential debt limits and financing problems.

The lawsuit states that since that time, Gorsuch has “continually represented to Rapid Construction and assured that they had an agreement with the Town of Hermosa that the pipe and materials would be utilized on the deferred project when financed, and Rapid Construction, as agreed to, would be paid in full for the pipe and materials, together with interest at the rate of two percent per month.”

No settlement has been reached on the lawsuit.

CCH was also recently faced with being asked to leave Custer City Hall, where it is housed, but the city has indicated a willingness to allow CCHâï¿½ï¿½more time to find a new facility.

Commissioner David Hazeltine said he is willing to assist the CCHâï¿½ï¿½board with funds if the county has them, saying he has wanted to get CCHâï¿½ï¿½straightened out “since he came on (the commission) four years ago.”

Wood said he and the other new CCH board members were enthusiastic and would work with the other board members to get to the bottom of the problems plaguing CCH. Commissioner Phil Lampert asked Wood to “keep an open mind”âï¿½ï¿½and not have any preconceived agendas when investigating the problems.

“Iâï¿½ï¿½don’t want this to turn into a witch hunt,”âï¿½ï¿½he said.

That led Wood to call the situation messed up, and said he had already heard Lampert’s concerns over the investigation from another CCH board member.

“Everybody has an open mind,”âï¿½ï¿½Wood said.âï¿½ï¿½“Iâï¿½ï¿½don’t need to be told three or four times.”

The commission also heard from county resident Blair Waite, who asked the county to reduce or eliminate a $450 application normally required by the county for a lot line adjustment on his land.

Blair said he bought the land in question in the ’70s and had previously split one acre out of the parcel to put a home. Subsequent to that, Waite purchased additional acreage next to his land, but never requested to have the lot line erased. However, Waite did pay the $450 when he peeled off the one acre from the lot, which is why he requested the reduction or elimination of the fee this time around.

County planning director David Green said he felt the most appropriate solution would be to eliminate the $350 preliminary plat fee and charge Waite only the $100 final fee to pay for planning’s time reviewing the plat and the planning commission’s work. The commission eventually voted to follow Green’s recommendation.

Finally, the commission reconvened as the board of adjustments and unanimously approved giving commissioner Mark Hartman a variance for a garage on his land southwest of Custer. Hartman abstained from both the discussion and vote on the issue.

Hartman’s garage, according to county ordinance, is built too close to his property line, something that wasn’t discovered until the new adjacent property owner brought the issue to the attention of the commission. The options for the commission were to grant Hartman a variance, move the property line or require the garage to be moved. However, there are rock outcroppings creating an impediment to moving the building.

Lampert said the county planning commission recommended approving the variance, but cautioned the commission that Hartman’s case was “probably not the only case in Custer County where this is happening,”âï¿½ï¿½and said other such variance requests are likely to come before the commission.

Hazeltine said he initially wasn’t in favor of granting the variance, but said after studying the issue he was, although he conceded things could have been done differently, such as seeking a variance prior to the construction.

“He should not be penalized because he is a commissioner,”âï¿½ï¿½Hazeltine said. “If Mark wasn’t a commissioner, Iâï¿½ï¿½would still approve this. Iâï¿½ï¿½couldn’t have said that last week.”